As job cuts continue and the balance fund dwindles, the Pittsburgh Public Schools board is struggling to overcome the district’s financial distress.

On the heels of cutting 217 central office positions last year, Superintendent Linda Lane said an additional 400 to 600 jobs will be lost during the 2012-13 academic year. The district’s recently approved 2012 budget is $529.8 million, down 2.1 percent from the previous budget of $540.9 million.

To make matters worse, the new budget includes an operating deficit of $21.7 million. The district will compensate for the shortfall by dipping into its fund balance, which contains nearly $43 million.

“We’re working to reduce the $21.7 million gap and we think we can get it down to between $14 million and $16 million by the end of the current budget year,” Lane said. “We’re not out of money, but we’re getting close. We’ve pushed the problem back to 2012 when we could be in the red.”

Last year, the board believed it would be confronted with a projected deficit of $100 million by 2015. As a result, it began taking action in 2011 to decrease the funding gap and enhance the district’s overall efficiency. The strategy, which reduced operating expenditures by more than $11 million, included closing seven schools, adjusting class size and reducing staff.

Slashing operating expenses is partially responsible for the 2012 budget deficit being reduced from the projected $38.2 million to $21.7 million. Continuing its strategy for curtailing costs also is expected to help the board lower the operating deficit in 2015 from the originally anticipated $100 million to just more than $50 million.

“In doing our planning to reduce costs and build a sustainable district, we started as far away from the classroom as we could,” Lane said. “Reductions in central office and debt service in 2011 were only the beginning, but not enough to close a budget gap that is expected to increase dramatically.”

Lane, who was hired as superintendent in 2011, knew that job cuts were inevitable even before she began serving in her current position.

Although she is still relatively new to Pittsburgh, she has more than 40 years of experience working in public education, primarily in Iowa as a teacher and a deputy superintendent.

“This is the worst situation I have ever seen in terms of budget reductions, cutting costs and reducing positions,” she said. “We are at a very important crossroad. We must find a way to continue to accelerate the progress we are making academically by using far fewer resources than in the past.”

Lane attributes the financial status of the district, which has nearly 26,000 students, to reductions in state funding, growing annual expenses, declining enrollment, and a trend of taking money from the fund balance.

She noted the district lost $9 million in charter school reimbursements from the state and another $3 million in block grant funding that resulted in reductions in early childhood programs.

“We lost about 16 early childhood classrooms last year and that is unacceptable. I don’t blame the district, though. I blame Harrisburg,” said Nina Esposito-Visgitis, president of the Pittsburgh Federation of Teachers, which represents about 2,600 teachers, 600 paraprofessionals and 30 technical/clerical employees.

“I worry that the cuts will be debilitating to the progress we have made in the district and I wonder how the students will be impacted.”

Information provided by the Pennsylvania Department of Education shows the district, which operates its budget on a calendar year, will receive more than $218 million in state funding for 2012-13. However, the district received less money from 2008 through 2011, creating an ongoing deficit.

Lane, who has thoroughly reviewed the district’s records, believes it was easier to tap the fund balance when more money was coming in from Harrisburg around 2005.

“The real issue for us didn’t begin with the most recent budget that the governor put forward,” she said.

“It began in 2005 when the district started to spend down its fund balance in order to cover expenses. Back then, the district was getting increased money from Harrisburg, so dipping into the fund balance probably didn’t seem like a bad idea.”

She likens the district’s action at that time to an individual relying on his or her savings account in order to survive. The big difference is that students, teachers and other employees are impacted when a district’s bottom line falters.

Lane is straightforward about the need to continue making changes during what she calls a “daunting” time. She notes the importance evaluating the effectiveness of all employees, including teachers, principals, the administrative staff and her own performance.

It also will be essential to address the declining enrollment, which she attributes to the downfall of the steel industry, the subsequent drop in Pittsburgh’s population and the recent growth of charter schools.

Lane said it will be necessary to improve the schools where parents want to send their children and to consider closing those where enrollment is low.

“We have a lot of empty seats in Pittsburgh and we prefer to spend more money on the seats with kids. That’s what the closings were about,” she said.

“As challenging as these times are, I believe we can come out being a better district. I know there will be a lot of difficult decisions, and that doesn’t make you popular on Facebook.”